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With the holidays right around the corner, online retailers --
large and small -- are preparing for what’s expected to be the
biggest selling season in ecommerce history.

While exciting for entrepreneurs, the one major obstacle
small-business owners will face is competing with the almighty
Amazon. From their high-brand awareness to low prices, your small
online shop will have to be extra savvy to compete – especially
with a limited budget.

1. Use your small size to make a big impact.
First and foremost, you need to accept that Amazon is an
extremely powerful player. Instead of puffing up to seem like a
large company, your small business should embrace its size and
“show off its smallness” to build an advantage over the Amazon
machine.

The good news is more consumers, particularly the key millennial
demographic, are looking to support a cause, including promoting
small and local businesses. To capitalize on this trend,
broadcast your story and startup culture as much as possible. For
example, explain the history and mission of your business on your
“About Us” page to make an instant connection. Even more, your
small business vibe should become a core brand component, so be
sure to include any relevant icons (Better Business Bureau,
Chamber of Commerce and others) on your website.

Also, one of the most impactful perks of being small is the
ability to personalize the customer experience. This can be done
through simple tactics like sending personalized “thank you”
emails, or even including handwritten notes in order packaging to
add that special touch. The key here is to make customers feel
good about buying from your site, something that Amazon simply
can’t do.

2. Leverage existing customers early and
often. Marketing Metrics claims that your business
has a 60-70 percent chance of selling to an
existing customer, with only a 5 to 20
percent chance of selling to a new prospect. Pair that
with the fact that it costs six to seven times more to acquire a
customer than to retain one, and it becomes clear that
encouraging current customers to make repeat purchases is
paramount to the success of your small business this holiday
season.

To get started, send email-marketing messages as soon as
possible, namely to reintroduce your business to existing
customers. Simply appearing in customers' inbox will remind them
of their previous purchase and place your shop back into their
consideration set. As the holidays draw closer, your email
frequency should also increase, extending personalized discounts
and product recommendations to increase sales conversions.

Another useful tactic is to utilize loyalty programs to encourage
shoppers to return to your website to redeem points or cash.
Email can also be used here, sending a reminder message for
customers to make purchases using existing rewards, or even
offering special deals to loyalty-program members. Regardless of
approach, you’ll need to maximize the value of your existing
customer base to take a bite out of Amazon’s market share.

3.Try to compete on price, but protect
your profit margins. Beyond brand awareness, many online
shoppers make holiday purchases on Amazon because of cost
savings. Because Amazon is such a huge player, they can easily
afford to offer some of the lowest prices on the web while
accepting razor-thin profit margins. Smaller businesses, on the
other hand, don’t have that luxury, meaning that every dollar and
order counts.

Naturally, your small business will be pressured to cut prices to
remain competitive with larger players. But when doing so, you
must be highly strategic by looking at profit margins on a
per-product basis. If one line of products has a large profit
margin, it makes more sense to reduce prices there as opposed to
a product line with tiny margins.

As the holidays draw near, time exists for you to work with
suppliers to see if there are any cost savings or discounts. Once
those conversations are held, then explore expanding your
presence by listing products on various marketplaces -- including
Amazon, Google Product Search and Nextag.

4. Focus on increasing average order value.
Since your online store won’t enjoy the same volume of customers
as Amazon, do all you can to increase average order value. This
technique includes finding ways to increase the amount of money
each customer spends and the number of items purchased with each
transaction. Fortunately, doing so is easier than you might
think.

To get started, take a page out of Amazon’s book by offering free
shipping -- but only at a certain amount. For example, by only
offering free shipping with a $50 or $100 purchase, you’re
encouraging customers to spend more to receive the discount.
Another idea is to offer a gift card with a certain purchase
amount, such as a $10 gift card with $100 purchase. And finally,
try increasing the number of items customers add to their
shopping cart by offering product accessories, showcasing related
products or bundling items to spur impulse buys.

5. Stay positive and keep your chin up. Half of
the battle is keeping your head held high in the face of the
Amazon giant. Although the cards may seem stacked against you,
with a little hard work and dedication, you can compete, and even
beat Amazon this holiday season.

Remember this: You know your products and customers better than
anyone else, so use that to your distinct advantage. Amazon is
all about quantity, whereas you can provide a high-quality and
unique customer experience. Simply arm yourself with product
knowledge and exceptional service, and you’ll earn customers far
beyond the holidays to compete with Amazon all year long.